Friday, May 28, 2010

Since the California Department of Managed Health Care (DMHC) began its regulatory mission a decade ago, it has levied nearly 1,200 enforcement actions against health plans, providers and other entities for violating state laws and regulations. The DMHC typically issues penalties for not responding to member grievances or failing to pay claims in a timely fashion.

Among the 170 organizations that have been penalized by the DMHC, Anthem Blue Cross of California stands alone.

The Indianapolis-based Anthem has racked up a remarkable 479 enforcement actions, or more than 40% of the statewide total, according to DMHC records. Some 275 of those actions have been levied against Anthem since early 2009 – including a $2.5 million fine the agency issued last November but has yet to publicize.

Anthem's overall number is more than quadruple the 102 enforcement actions levied against San Francisco-based Blue Shield of California, the second-largest total.

Anthem Blue Cross equated the number of enforcement actions to its size: "As the state's largest health benefits company serving more than 8 million people in California each year, it is not surprising that we might have the largest number of inquiries from the DMHC," the insurer said in a prepared statement. Yet the only insurer of similar size to Anthem in California, Oakland-based Kaiser Foundation Health Plan, has received just 84 enforcement actions from the DMHC. It has 6.7 million enrollees statewide.

"The failure to timely respond to member grievances appears to be due to the lack of administrative capacity," stated (DMHC spokeswoman Lynne Randolph).

Comment: A unique characteristic of the U.S. health care system is the profound administrative waste, in a large part due to the administrative excesses of the private insurers and the administrative burden that they place on the providers of health care. The administrative component of just the private insurers alone is so large that Congress has codified the policy that 15 to 20 percent of health insurance premiums will be allocated for the insurers to use for their own intrinsic administrative services.

Currently outrage is being expressed over the very high insurance premium increases which the insurers attribute to increased health care costs. But the insurers are retaining the same high percentages of these ever higher premiums even though their marginal costs for administrative services should not be increasing at the same rate as health care prices. The increased spending on health care has provided a windfall for the private insurers.

So what are we getting for the massive amount of dollars being retained by the private insurers? Administrative services, and in great excesses at that. Yet why has WellPoint's Anthem Blue Cross had so many enforcement actions levied against it? As the Department of Managed Care's spokeswoman states, "The failure to timely respond to member grievances appears to be due to the lack of administrative capacity."

Lack of administrative capacity?! With what we're paying them for their administrative services?! And President Obama and Congress want to keep this industry in charge?!

This is not the time to sit back and see how the reform plays out. PPACA cannot ever insure everyone, and it cannot control the intolerable increases in spending. Now, more than ever, is the time for activism! Let's demand a health care program that we can believe in - an improved Medicare for all!